General Motors: Mark of Excellence

GM: Mark Of Excellence

Most of us were raised believing that during the Second World War, Detroit was the "Arsenal of Democracy," with images of tanks and planes rolling from assembly lines that had been producing autos a short time before. The whole of American industry was converted into a crushing weapon against Fascism.

What we weren't told was that the same companies which were providing the armed might of the U.S. were simultaneously supplying weapons for the Nazi regime.

This startling fact was brought before the U.S. Senate Monopoly and Anti-Trust Sub-committee by Bradford C. Snell, a research economist for the Sub-committee.

Although the charges are of the most serious magnitude, GM saw fit to issue only a three-sentence denial, and the Detroit papers buried the whole story. (The FREE PRESS put it on page 16-F).

With the author's permission, the SUN is publishing an excerpt from Snell's copyrighted statement documenting U.S. automotive company cooperation with the Nazis.

This article originally appeared in the FIFTH ESTATE.

During the 1920's and 1930's, the Big Three automakers undertook an extensive program of multinational expansion. In 1929, General Motors acquired Germany's largest automobile company, Adam Opel, A.G. By the mid-1930's, these three American companies owned automotive subsidiaries throughout Europe and the Far East; many of their largest facilities were located in the politically sensitive nations of Germany, Poland, Romania, Austria, Hungary, Latvia and Japan.

As the Axis Powers overtly prepared for war, General Motors, Ford, and, to a lesser extent, Chrysler, found themselves involved in serious conflicts of interest and national loyalties. Due to their concentrated economic power over motor vehicle production in both Allied and Axis territories, the Big Three inevitably became major factors in the preparations and progress of the war. In Germany, for example, General Motors and Ford became an integral part of the Nazi war efforts. GM's plants in Germany built thousands of bomber and jet fighter propulsion systems for the Luftwaffe at the same time that its American plants produced aircraft engines for the U.S. Army Air Corps.

Order of the German Eagle

As owner of Germany's largest automobile factory, General Motors was quite naturally a more important factor in the Axis war effort than either Ford or Chrysler, whose investments were substantially less.

GM's participation in Germany's preparation for war began as early as 1935. That year its Opel subsidiary cooperated with the Reich in locating a new heavy truck facility at Brandenburg, which military officials advised would be less vulnerable to enemy air attack. During the succeeding years, GM supplied the Wehrmacht with Opel "Blitz" trucks from the Brandenburg complex. For these and other contributions to war-time preparations, GM's chief executive for overseas operations in 1938 was awarded the Order of the German Eagle (first class) by Chancellor Adolf Hitler.

Ford was also active in Nazi Germany's prewar preparations. In 1938, for instance, it opened a truck assembly plant in Berlin whose "real purpose," according to U.S. Army Intelligence, was producing "troop transport-type" vehicles for the Wehrmacht. That year Ford's chief executive received the Nazi German Eagle (first class).

Given the dominant structural positions of GM and Ford in the war economies of both America and Germany, these firms had the power to influence the course of World War II. They could determine, for example, which belligerent would benefit from their latest advances in war-related technology. Due to their concentrated economic power in both economies, GM and Ford were able to shape the conflict to their own private corporate advantage. Whether in fact their profit-maximization determinations were also in the best interests of international peace or, more specifically, in accord with the national security objectives of the United States at that time, is entirely unclear.

The outbreak of war in September 1939 resulted inevitably in the full conversion by GM and Ford of their Axis plants to the production of military aircraft and trucks. During the last quarter of 1939, for instance, GM converted its 432 acre Opel complex in Russelsheim to warplane production. From 1939 through 1945, the GM-owned Russelsheim facility alone assembled 50 per cent of all the propulsion systems produced for the JU-88 medium range bomber. According to the authoritative work of Wagner and Nowarra, the JU-88 bomber, by 1940, "had become the Luftwaffe's most important bomber, and remained so for the rest of the war."

The Russelsheim facility also assembled 10 per cent of the jet engines for the ME-262, the world's first operational jet fighter. Wagner and Nowarra described this jet plane as perhaps "the most important military aircraft to come out of Germany." With a top speed of 540 miles per hour, it was more than 100 miles per hour faster than the American P-510 Mustang, the fastest piston-driven allied fighter. Not until after World War II were the Allies able to develop pure jet aircraft. By producing ME-262 jet engines for the Luftwaffe, therefore, GM's Russelsheim plant made a significant contribution to the Axis' technological superiority in the air.

90% of Germany's Half-tracks

On the ground, GM and Ford subsidiaries built nearly 90 per cent of the armored "mule" 3-ton half-tracks and more than 70 per cent of the Reich's medium and heavy-duty trucks. These vehicles, according to American intelligence reports, served as the "backbone of the German Army transportation system."

In addition, the factories of Ethyl G.M.B.H., a joint venture of l.G. Farben, General Motors and Exxon subsidiaries, provided the mechanized German armies with synthetic tetraethyl fuel.

During 1935-1936, at the urgent request of Nazi officials, who realized that Germany's scarce petroleum reserves would not satisfy war demands, GM and Exxon joined with German chemical interests in the erection of the Ethyl tetraethyl plants. According to captured German records, these facilities contributed substantially to the German war effort: "The fact that since the beginning of the war we could produce lead-tetraethyl is entirely due to the circumstances that shortly before the Americans had presented us with the production plants complete with experimental knowledge."

It was, of course, in the best interests of GM and Ford to cooperate in the Axis war effort. Although GM, for example, was in complete management-control of its Russelsheim warplane factory for nearly a full year after Germany's declaration of war against the United States on December 11, 1941, its refusal to build warplanes at a time of negligible demand for automobiles would have brought about the economic collapse of its Opel plant. Moreover, it might have resulted in confiscation of the facility by the German Government.

In fact, on November 25, 1942, the Reich did appoint an administrator for the Russelsheim plant who, although not permitted to interfere with the authority of the GM-appointed board of directors, was instructed to oversee operations. Nevertheless, communications as well as material reportedly continued to flow for the duration of the war between GM and Ford plants in Allied countries and those located in Axis territories.

War Reparations

After the cessation of hostilities, GM and Ford demanded reparations from the U.S. government for wartime damages sustained by their Axis facilities as a result of Allied bombing. By 1967, GM had collected more than $33 million in reparations and Federal tax benefits for damages to its warplane and motor vehicle properties in formerly Axis territories, including Germany, Austria, Poland, Latvia and China.

Likewise, Ford received a little less than $1 million, primarily as a result of damages sustained by its military truck complex at Cologne.

Since World War II, the rebuilt Russelsheim and Cologne plants have enabled GM and Ford, respectively, to capture more than two-thirds of the German motor vehicle market.

Due to their multinational dominance of motor vehicle production, GM and Ford became principal suppliers for the forces of fascism as well as for the forces of democracy. (End of excerpt)*

GM Denial

Shortly after the press was made aware of the above charges levelled by Bradford Snell, the General Motors Corporation issued a curious denial of the story. The GM spokesperson stated that "several other corporations" also invested in Pre-World War II Nazi Germany and that none of these companies had liquidated their assets because of the war. In effect, GM stated that it was not the only offender and that Snell was merely exposing a normal business practice.

When this newspaper telephoned the GM press room for further comment, GM made the following tersely-worded statement: "The allegation that GM assisted in Nazi Germany's war effort is false. A German board of managers appointed by the Nazis assumed responsibility for daily operations of Opel after September 3, 1939. After the U.S. and Germany were at war, the operation was under control of a German alien custodian."

In the course of his presentation, Bradford Snell refutes this GM disclaimer in several places. He cites, for instance, the fact that GM "was in complete management control of its Russelsheim warplane factory for nearly a full year after Germany's declaration of war against the United States ..."

Moreover, although the German Government could have confiscated the GM holdings, there was actually no reason to do so, since GM was cooperating completely in the German war effort. During this entire period, GM facilities in the Allied countries were in communication with facilities in the Axis countries. Information and material were exchanged. GM's stockholders continued as usual to derive profit from its German facilities.

More importantly, GM made no effort to deny that the corporation aided in the German preparations for war. Hitler made no secret of his aggressive foreign policy aims, and GM may also have been impressed by Hitler's repression of the German labor movement. In any case, while GM and Ford executives were receiving awards from the Fuhrer, the most vicious and anti-democratic regime in modern history was clamped down on Germany.

Catch-22

Many Americans might feel outraged by the fact that GM acted to maximize its profits from World War II, regardless of which side won. Patriotic members of the VFW might feel complete bewilderment at the paradox of GM, that ultimate American institution, aiding a war-time enemy. Families of American soldiers killed in that war might wonder at the irony of the country's largest corporation manufacturing the weapons used to kill their sons, husbands or fathers -- and then collecting war reparations for the allied bombing of GM's Axis facilities.

But all these paradoxes are easily sorted out by the cost-accounting minds of America's business leaders, like GM's Chairman of the Board, Richard Gerstenberg. For as long as GM is assured of a friendly investment atmosphere, it can just as easily invest in fascist countries as in bourgeois democracies. The investment dollar crosses national boundaries as easily as the wind. The irony is that most Americans defend capitalism.

Were it not a question of fascism and big business versus human progress, one might recall the absurdity of Milo Minderbinder, of "Catch-22" and his fantastic speculation schemes to sell arms, information, food and clothing to generals on both sides. As it turns out, Joseph Heller's fictional imagination in "Catch-22" had real historical reference. As Milo (or GM's German executives) would tell you, war is first of all big business.

*Snell's pamphlet, "American Ground Transport," which contains the above-quoted material, is available without cost from U.S. Senator Philip A. Hart, Senate Office Bldg., Washington DC. The pamphlet is copyrighted in 1974. Snell plans to publish an extended version in book form.

Pull quotes:

GM's chief executive for overseas operations in 1938 was awarded the Order of the German Eagle (first class) by Chancellor Adolf Hitler.

GM and Ford built nearly 90 percent of the armored "mule" 3-ton half-trucks and more than 70 percent of the Reich 's medium and heavy-duty trucks.

World peace and human progress are necessary to our business.

That's the single most important point about a corporation, like General Motors, being multinational in its operations.

Peace and human progress aren't made by platitudes. We realize that. In a hard-nosed view of the world, these are the facts, as they apply to our business:

We build cars where the business opportunities are. We don't do it on the basis of labor costs being lower than in the United States. Nor do we build an overseas plant just because of the relative tax advantages. The demand for our product dictates the location of the plant.

We can operate at a profit in a foreign country as long as there's peace. There is no greater danger to multinational corporations than war.

Our continued growth as a multinational company depends upon the raising of living standards in the underdeveloped countries of the world. And not just to a subsistence level, but to a decent, really acceptable level.

We don't make cars just for the rich. We mass produce them. As the general living standard in a country rises, our business opportunity increases.

The effect on our national interest here at home of GM operating as a multinational company has also been good. From 1946 through 1972, General Motors has made a favorable contribution of $14 billion to the U.S. balance of payments.

While we opened plants in other countries, it has not adversely affected employment in the U.S. Between 1960 and 1972, average employment at GM in the United States increased by 20%. That compares favorably with a 12% increase in total U.S. manufacturing during the same period.

However, we limit our overseas business to manufacturing and marketing. General Motors has not and will not speculate in world money markets.

As builders and sellers in countries around the world, our growth and profit are tied to continuing world peace and human progress.

We like doing business under those conditions.

General Motors